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Constructive Discharge

What is a “constructive discharge”? A constructive discharge is a legal concept meaning that even though an employee has resigned, the law will treat the resignation as an involuntary discharge so long as the employee quit because of intolerable discriminatory or retaliatory working conditions. Here, “constructive discharge” means, “it’s as if” the employee were discharged.

You may ask, what does it matter if I resigned or the employer discharged me as long as I was discriminated against at the job? It matters because if you decide to sue your employer for discrimination, you can claim a lot more economic damages if you were discharged (actually or constructively) than if you quit. If you were discharged for discriminatory reasons, you may claim economic damages arising after your termination (e.g. loss of wages or other benefits). But if you resign, even though you have been discriminated against, you effectively forfeit your right to claim post-termination damages because, so reasons the courts, you made a voluntary decision to give up your job and the economic benefits coming with that job.

When is a resignation a constructive discharge? Or put differently, when can you resign in the face of discriminatory work practices without giving up your right to post-termination economic damages? The touchstone for a constructive discharge claim is the existence of “intolerable working conditions.” As the Supreme Court has written, a constructive discharge occurs when “working conditions become so intolerable that a reasonable person in the employee’s position would have felt compelled to resign.” Pennsylvania State Police v. Suders, 542 U.S. 129 (2004).

The mere existence of discrimination or retaliation at a job does not turn a resignation into a constructive discharge. The discrimination or unlawful conduct must be severe for there to be a constructive discharge. For instance, the sexual harassment experienced by an employee must be of a heightened form, or, in the words of the Supreme Court, “ratcheted up.” Id. Likwise, merely suffering a discriminatory demotion or pay cut does not qualify as a constructive discharge. For there to be a constructive discharge, the demotion must be “humiliating,” the pay cut “extreme,” a transfer so unfavorable that the employee would face unbearable working conditions. Id.

The burden of showing “intolerable working conditions” is a very difficult one. Most claims of constructive discharge fail. Courts are very hesitant in finding an employee’s conditions so bad as to justify his or her resignation. The New York State and federal courts within the Second Circuit (that includes New York, Vermont and Connecticut) require in order to prove a constructive discharge, a plaintiff must not only show that the working conditions were objectively intolerable, but that the employer acted intentionally in creating those conditions. Under this standard, it is not enough to demonstrate that the employer was negligent in allowing the intolerable working conditions to exist. In the Second Circuit, a plaintiff who shows that the employer knew that the plaintiff was suffering intolerable sexual harassment, but did nothing to stop the harassment, still has not established a constructive discharge because the employer’s inaction or ineffectiveness in stopping the harassment was negligent, not deliberate.

Fortunately, there are signs that the courts within the Second Circuit have begun to recognize that inequitable results occur when the constructive standard requiring a plaintiff to prove the presence of intolerable working conditions as well as the deliberateness of the employer’s conduct. I predict that in the coming years, we will see the New York and Second Circuit courts relax the “employer deliberateness” requirement. If that development occurs, the burden of proof for a constructive discharge within this Circuit will be a little less daunting.

What is the lesson if you are laboring under discrimination at the job and are considering quitting? Wait if you can. At least wait until you have had a chance to speak to a lawyer. Otherwise, you may find yourself out of your job without being able to prove a constructive discharge. And if you cannot prove a constructive discharge, you will have lost your claim to post-termination economic damages, no matter how clear the discrimination. Also, you or your lawyer are always in a better position to negotiate some form of severance if you haven’t quit and you are still employed. So, if in doubt, stay at the job. You can always quit later.

John A.Beranbaum